Tough Global Economic Conditions Definition
November 2021
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GLOBAL OVERVIEW
After a weak second quarter in 2021, global GDP growth picked up in the third quarter and continues to be underpinned by generally accommodative (monetary and fiscal) policy stances, pent-up consumer demand, and faster business investment. Now past the worst economic impact of the Delta variant, global growth is likely to continue to improve in the fourth quarter. Taken together, The Conference Board forecasts global GDP to expand by 5.1 percent in 2021, rebounding from the 3.3 percent contraction in 2020. Global Economic Outlook 2022: From Pandemic Downturn to Growth Revival, a series of reports released by The Conference Board, tracks the future of this historically rapid resurgence for the years ahead including 2022–2031 GDP projections for key economies across Asia, Europe, the American, the Gulf Region, and beyond.
Base effects from the deep global contraction in 2020 somewhat overstate this growth momentum as we head into 2022. Still, next year is likely to bring another year of above-average growth in most regions, with global GDP expanding by 3.9 percent. However, we note that quarterly growth rates recorded toward the end of next year will likely show a slowing global economy. We expect the global economy to expand at a pace of 2.8 percent in 2023, closer to the anticipated long-term trend we project for the balance of the decade.
Amid rising global demand, cost pressures are building. They have been particularly intense in commodities' markets, including energy and food. Intense global inflationary pressures are likely to last longer as disruptions caused by the pandemic result in order backlogs amid factory shutdowns, stymied transportation activity due to labor shortages (e.g., trucking), and shipping container shortages. Moreover, a delay in the transition away from primary goods consumption to a more balanced consumer spending mix that includes in-person services will also keep overall price levels higher for longer. Hence, business executives should expect higher interest rates sooner than later, as central banks shift towards less accommodative monetary policies to counteract inflation. Central bank actions will include raising policy rates, among emerging markets. Among mature economies, expect quantitative easing tapering and the potential for some interest rate hikes.
Over the next decade, The Conference Board projects global growth to gradually moderate to an average annual rate of around 2.5 percent from the high growth rates seen in the immediate aftermath of the pandemic recession. The severe contraction induced by the global pandemic may leave a permanent scar on global growth in the long run, but global growth is expected to return to close to, but not higher than, previous projections made before the pandemic. Factors that have for a large part driven global growth in the last two decades, including the greater supply of labor and fast growth in capital stock to worker ratios, are expected to weaken substantially over the next decade. These slowing factors will only be partially offset by a shift towards greater contributions from qualitative growth sources, driven by accelerating digital transformation and productivity improvements, as well as additional long-term investments in physical and social infrastructure in large economies including the United States.
REGIONAL INSIGHTS FOR WHAT'S AHEAD
United States
Short-Term Outlook
The Conference Board forecasts that US Real GDP growth will rise to 5.0 percent (annualized rate) in Q4 2021, vs. 2.0 percent growth in Q3 2021, and that 2021 annual growth will come in at 5.5 percent (year-over-year). Looking further ahead, we forecast that the US economy will grow by 3.5 percent (year-over-year) in 2022 and 2.9 percent (year-over-year) in 2023. This forecast is a downgrade from our October outlook despite the recent approval of a large bipartisan infrastructure package by Congress. While this package will certainly benefit growth in 2022 and 2023, our forecasts had already assumed it would pass for several months.
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Long-Term Outlook
The Conference Board projects potential US GDP will expand at an average rate of 2.1 percent (year-over-year) in the five years that immediately follow the pandemic (2022 to 2026). Over the longer-run, The Conference Board forecasts potential US GDP growth rates will slow to an average of 1.8 percent from 2027 to 2031.
Europe
Short-Term Outlook
After contracting by 6.5 percent in 2020, The Conference Board forecasts Real GDP in Europe to expand by 5 percent in 2021 and 4.1 percent in 2022. After a major growth slowdown in the fourth quarter of 2020 and the first quarter of this year, GDP growth resumed in the second and third quarters and is likely to continue to do so in the remainder of the year. Europe is on track to continue its recovery with demand expected to continue in the short-term. Bigger problems are on the supply side in the short-term, with shortages and supply chains disruptions negatively affecting activity in the manufacturing sector, especially in Germany.
Long-Term Outlook
The Europe region, which includes 31 markets, should see average growth of 1.1 percent for the next decade (2022–2031). In 20 out of 31 markets, growth will be above average. In four, growth will be above 2 percent. Economies in Central and Eastern Europe are projected to see the fastest growth rates.
China
Short-Term Outlook
The Conference Board expects official real GDP growth to come in at 8 percent year over year in 2021, and slow to 5.3 percent next year. Rapid weakening of domestic demand, as seen in both household spending and corporate financing, accompanied by rising inflationary pressures, may induce policy easing. This could include a relaxation of production controls and monetary loosening. However, any such pro-growth measures are unlikely to reverse the downward trajectory of economic growth that is anticipated to last into 2022.
Long-Term Outlook
China's shrinking labor force and slowing growth in capital accumulation will cause its potential growth rates to continue to decline in the coming decade. Still, investment will continue to be the lead driver of GDP growth. China's low level of capital stock per-capita relative to advanced economies suggests there is still significant room for catching up.
Gulf region
Short-Term Outlook
Driven to a large extent by a reduction in energy-related economic output, overall GDP declined by 4.8 percent in 2020. For the full year 2021 we again expect a stronger contribution from non-energy related GDP to drive an overall GDP growth rate of 3.3 percent. A fuller resumption of global oil demand and related Gulf oil production should then lift the 2022 GDP growth rate to 4.7 percent.
Long-Term Outlook
The Conference Board projects potential GDP growth for the region to average 2.9 percent annually between 2022 and 2031, slightly lower than the average recorded in previous decades. The long-term projections show growth drivers will change as governments rush to implement their development plans. Between 2022 and 2031, the region's economies are expected to focus on their renewable energy and digital transformation targets while creating more room for competition and innovation in the non-oil private sector.
FOR MORE INFORMATION
To access all our forecasts and projections for GDP and the underlying supply-side drivers, please use The Conference Board Data Central.
For an overview of the methodology behind the GDP growth projections, please see our working paper (October 2020).
Pandemic recession versus the global financial crisis of 2008-2009
Quarterly GDP index
Notes: Quarterly GDP data for China are based on official data rather than alternative GDP growth data utilized in the Global Economic Outlook and thus overstate the growth trajectory of emerging markets and developing economies.
Source: The Conference Board Global Outlook, November 2021.
The Conference Board Global Economic Outlook, 2010-2031
| Real GDP Growth Rates (Average Annual Percent Change) | ||||||
|---|---|---|---|---|---|---|
| Actual | Actual | Estimate | Forecast | Trend | Trend | |
| 2010-2019 | 2020 | 2021 | 2022 | 2022-2026 | 2027-2031 | |
| United States | 2.2 | -3.4 | 5.5 | 3.5 | 2.1 | 1.8 |
| Europe | 1.7 | -6.5 | 5.0 | 4.1 | 1.2 | 1.1 |
| Euro Area | 1.3 | -6.9 | 4.8 | 3.9 | 1.0 | 0.9 |
| United Kingdom | 2.0 | -9.7 | 7.0 | 4.7 | 1.1 | 0.9 |
| Japan | 1.2 | -4.7 | 2.5 | 3.1 | 0.8 | 0.8 |
| Other Mature Economies | 3.1 | -2.2 | 5.1 | 3.7 | 2.5 | 2.4 |
| All Mature Economies | 2.0 | -4.6 | 5.0 | 3.7 | 1.7 | 1.5 |
| China | 6.3 | 2.2 | 5.0 | 3.3 | 3.7 | 3.3 |
| India | 7.2 | -7.1 | 7.5 | 8.5 | 4.0 | 4.1 |
| Other Developing Asian Economies | 5.1 | -2.9 | 3.0 | 4.7 | 3.5 | 3.7 |
| Latin America | 1.7 | -7.5 | 6.7 | 2.0 | 1.6 | 1.7 |
| Brazil | 1.4 | -4.4 | 5.2 | 0.9 | 1.7 | 1.7 |
| Mexico | 2.7 | -8.5 | 6.1 | 2.9 | 1.4 | 1.4 |
| Middle East & North Africa | 3.1 | -2.5 | 4.2 | 4.0 | 2.6 | 2.9 |
| Gulf region | 3.5 | -4.8 | 3.3 | 4.7 | 2.9 | 2.9 |
| Sub-Saharan Africa | 4.0 | -1.8 | 4.3 | 3.9 | 3.4 | 3.8 |
| Russia, Central Asia and SE Europe | 3.1 | -1.5 | 5.5 | 2.3 | 2.4 | 2.4 |
| Russia | 2.0 | -2.9 | 4.5 | 2.0 | 1.6 | 1.8 |
| Turkey | 5.8 | 1.6 | 8.9 | 2.5 | 3.6 | 3.1 |
| Emerging markets and developing economies | 4.7 | -2.1 | 5.3 | 4.0 | 3.2 | 3.2 |
| World | 3.3 | -3.3 | 5.1 | 3.9 | 2.5 | 2.4 |
| Addenda | ||||||
| United States (Adjusted) | 2.5 | -3.2 | 5.7 | 3.7 | 2.3 | 2.0 |
| China (Official) | 7.7 | 2.3 | 8.0 | 5.3 | 5.5 | 4.9 |
| India (Fiscal Year) | 6.6 | -7.3 | 7.9 | 8.9 | NA | NA |
Notes: All our underlying GEO data are accessible through The Conference Board Data Central; Chinese data are based on alternative GDP measures, See Harry Wu, China's Growth and Productivity Performance Debate Revisited—Accounting for China's Sources of Growth with a New Data Set, The Conference Board, 2014. The data was updated and revised in May 2020 and the historical data series are available through The Conference Board's Total Economy Database; United States (adjusted) refers to our alternative GDP series for the US which are revised upward as they are based on alternative price deflators for ICT investment goods and services.
Source: The Conference Board Global Economic Outlook, November 2021.
Tough Global Economic Conditions Definition
Source: https://www.conference-board.org/topics/global-economic-outlook
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